Stock Around the Clock: Remarks at the Roundtable on Preparations for 24-Hour Trading

Good morning, and welcome to today's roundtable. As usual, I must begin with my standard disclaimer: my views are my own as a Commissioner and not necessarily those of the SEC or my fellow commissioners. That disclaimer is so familiar that I can recite it in my sleep, which brings me to the topic of today's roundtable: overnight trading. This roundtable answers a call that Commissioner Crenshaw and I made nearly two years ago when the Commission approved 24X National Exchange's registration application[1] and follows the informative roundtable that SIFMA hosted earlier this year.[2]

Extended hours trading currently is taking shape as a 23-hour, five-day trading week. While extended hours trading has existed for several years on certain ATSs, it still accounts for less than 1% of total trading for NMS stocks and is highly concentrated in a handful of stocks.[3] Over the past two years, however, both new entrants[4] and legacy exchanges[5] have pushed aggressively to expand their operating hours, responding to demand, both abroad and domestic.

The industry, and our staff, have invested significant effort in updating the market's infrastructure to make this shift possible. In June, NSCC transitioned its clearing operations to a 24x5 model that runs continuously from Sunday at 8:00 pm until Friday at 8:00 pm.[6] That same month, the Commission approved changes to extend the SIP's operating hours, with the new schedule set to launch on December 6, 2026.[7] The Commission also approved modifications to implement the market-wide Limit-Up-Limit-Down plan during extended hours, and trading venues have established standards to determine how to treat certain corporate actions in this new environment.[8] In short, the securities market is moving decisively toward extended hours trading.

Yet in my conversations with market participants, many express ambivalence about the shift to extended hours trading. They often see it as an inevitable, but not entirely welcome complication, rather than as an exciting new opportunity. Some worry about the thinner order books overnight, wider spreads, and the resulting increased price volatility. Others are concerned about compressing back-office operations, such as overnight batch processing cycles or critical IT maintenance, into a single hour each night.[9] Practical questions also arise: How can firms ensure proper supervision and surveillance of trading and risk during overnight hours? Should issuers monitor trading in their shares overnight in case of extreme market moves? These concerns are the real consequences of extending trading into hours when human involvement is limited, automated systems carry more of the load, and many longstanding market systems and regimes must be reimagined. Beyond these operational issues, there are more fundamental human concerns, like sleep. Extended trading hours will amplify worries about a data feed going down at 3am or social media rumors tanking your stock while your corporate office slumbers.

Our markets are not breaking new ground in the move toward extended hours trading, and we can learn from markets that already are creatures of the night. The FX market in particular has operated 24/7 for decades.[10] Crypto markets certainly do not sleep. Certain index options trade overnight, and futures markets generally follow a 23/5 schedule similar to where our markets are headed.[11] Nor are our equity markets alone in extending trading hours. Just last week, Korea's main stock exchange, serving a country whose domestic investors have long shown a notable interest in accessing our markets, announced plans to extend trading hours to give foreign investors greater access to their markets.[12] In short, we have a lot of examples to from which to learn.

I am a big fan of roundtables. I appreciate the panelists for giving of their time and expertise and the Commission staff, especially from the Division of Trading and Markets, who work diligently to plan the panels and prepare the discussion. I hope you will indulge me by considering the following questions:

1. For those with experience in markets that have traded continuously or near-continuously for years, what are the most important lessons for the U.S. equities market as we move toward extended hours? What have those markets taught us about liquidity and market-making during overnight sessions? About manipulation and cybersecurity risks? Staffing models for the overnight shift? As we expand trading hours in the equity market, what mistakes should we be careful not to repeat?

2. How should broker-dealers fulfill their best execution obligations during the overnight session when liquidity is dispersed and spreads are wide? How should we think about investor protection in such a market, given that much of the demand for access may come from retail investors? Is there assistance that we at the Commission or at FINRA should be giving?

3. As one commenter asked, for asset managers, "will choosing not to trade overnight remain an acceptable fiduciary decision when liquidity and execution costs are unfavorable"?[13]

4. Currently, issuers make filings and publicize material information either prior to or soon after "core" trading hours to mitigate the real-time effect that information will have on the price of their stock. This information can include earnings releases as well as other material business developments. Will the change to extended hours trading require issuers to change their behavior?
5. Relatedly, since filings submitted to EDGAR after 5:30 pm are typically not processed until the next business day, does the Commission need to modify the EDGAR system to ensure that corporate actions and material information are disseminated timely in the overnight session?

6. Should the Commission give guidance or relief to ease the burdens that extended hours trading may impose on issuers, especially smaller ones?

As with all our roundtables, I look forward to a lively and productive discussion. If the conversation does put you to sleep, however, you will make it easier to envision markets that elide trading and sleeping hours. Thank you.